TMI Blog2021 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in section 2(f) of Central Excise Act, 1944. The contention of the adjudicating authority that the circular mention about methanol not ethanol, there are no difference whether it is methanol or ethanol since the property of both are same and the purpose of mixing is also same which is evident from the above Para 4.1 of IS 2796-2000. The only issue is that whether the blending of either ethanol or methanol with motor spirit amount to manufacture. This is abundantly made clear as per the above opinion of the chemical examiner and the same was accepted by the Central Board of Excise Customs. Therefore, this circular being binding on the adjudicating authority should have scrupulously followed the same and ought not to have been held that blending of ethanol with motor spirit is amount to manufacture. In the case of HINDUSTAN PETROLEUM CORPN. LTD. VERSUS COMMR. OF C. EX, DELHI ROHTAK [ 2008 (9) TMI 154 - CESTAT, NEW DELHI] it was held that mere blending of motor spirit with small quantities of additives to improve the quality of motor spirit and to reduce emission levels does not amount to manufacture. Since even after addition motor spirit continues to be used as motor sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt are engaged in the manufacture of Motor spirit falling under Central Excise Tariff Heading 27.10 at its refinery in Jamnagar. The said motor spirit was being cleared as such or after addition of 5% duty paid ethanol in the later situation 5% duty paid ethanol and 95% manufactured motor spirit are cleared by loading into road tankers by two separate pipelines in the refinery. The motor spirit is blended with Ethanol for the purpose of reducing Carbon Monoxide and consequent air pollution. The ethanol blended motor spirit (EBMS) was being cleared by the appellant to comply with requirement laid down by the Ministry of Petroleum and Natural Gas. The appellant paid the duty at the time of removal of ethanol blended motor spirit on its clearance value. The appellant was issued a Show Cause Notice dated 09.06.05 wherein, it was alleged that the process of blending ethanol with motor spirit amounts to manufacture as: (a) Notification No.63/2003-CE specifically exempted EBMS from excise duty and that there was no exemption on EBMS for the period 01.07.2004 to 07.08.2004. (b) Circular F.No.366/5/2002-TRU dated 02.01.2003 uses the word manufacture for the process of blending 5% etha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification No.25/2006-CE (NT) dated 20.11.2006 issued in exercise of the power under Section 11C is concerned, it held that as the notification exempted EBMS from payment of Central Excise Duty for the period from 01.07.20004 to 03.08.2004, it is clear that the EBMS has been considered as an excisable/dutiable and manufacture product under the provision of Central Excise Act, 1944. 02. Shri Vipin Jain, learned counsel along with Ms. Dimple Gohil, Advocate appearing on behalf of the appellant submits that the respondent has wrongly considered the issue before him as Central Excise duty is required to be paid on motor spirit since, the motor spirit is used captively in the manufacture of EBMS. He submits that the process of blending 5% ethanol with 95% motor spirit to produce EBMS does not amount to manufacture therefore, when the appellant have paid the duty on the higher value i.e. on the value of EBMS, no duty can be demanded on the unblended motor spirit. He submits that there is no difference in the motor spirit and EBMS as both are treated as motor spirit and falling under the same CETH 27.10 and both conform to BIS Specification i.e. BIS specifications 2796 for motor spir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.O.C.L. v. CCE, PATNA- 2019 (368) ELT 146 (Tri.-Kolkata) BHARAT PETROLEUM CORPORATION LTD. V CCE, PATNA- 2013 (295) ELT 106 (Tri-Kol) HINDUSTAN PETROLEUM CORPORATION LTD. V CCE- 2015 (319) ELT 133 (Tri.-Del.) BHARAT PETROLEUM CORPORATION LTD. V. CCE- 2018 (361) ELT 950 (Tri.-Chan.) BHARAT PETROLEUM CORPIORATION LTD. V. CCE- 2019 (366) ELT 903 (Tri.-Kol) 2.3 He further submits that the respondent has not correctly appreciated the effect of the notification No.25/2006-CX dated 20.11.2006 notified under Section 11C of the Central Excise Act, 1944, vide which it was directed that no duty was payable on EBMS for the period 1.7.2004 to 3.8.2004 if duty had been paid on motor spirit and ethanol. It is evident from this notification that the government has accepted that duty is not required to be paid at both the stages i.e. Prior to and after addition of ethanol but only at one stage. As the appellant had already paid higher duty amount of 3,97,68,000/- on EBMS, it could not have been called upon to pay excise duty on motor spirit prior to blending of ethanol. He referred to CBEC Circular No. 1078/02/2021-CX dated 22.06.2021 which has clarified that if duty is paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 2(f) of the Central Excise Act, 1944. On the basis of the facts of the case and the tests laid down by the hon ble Supreme Court in its various judgments. A statement made in a letter cannot be conclusive as to whether the process amounts to manufacture or not. 2.6 He submits that the respondent erred in referring to Notification No.67/95-CE which grants exemption to intermediate goods used captively in the production of excisable goods. He submits that motor spirit could not by any means be considered to be intermediate goods and therefore, the question of motor spirit not being exempted in terms of the above notification did not arise. The respondent ought to have appreciated that EBMS was nothing but motor spirit albeit with Ethanol blended in it. The appellant has consciously chosen to pay duty at a later stage mainly after blending ethanol in the motor spirit on the higher value with a view to comply with the law as laid down by the Hon ble Supreme Court interalia in the judgments of JG GLASS (supra) SIDDHARTHA TUBES LTD. v CCE- 2000 (115) ELT 32 (SC) 2.7 In view of the above submission, appellant submits that the impugned order be set aside. 03. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 83/83/94-CX dated 13.12.1994 was continued and effective. Therefore, the finding of the Learned Adjudicating Authority based on the draft circular is not sustainable. In this situation we are of the view that the entire matter needs to be given a relook by considering the various alternative submission made by the appellant From the above order, it was made clear that the circular 83/83/94-CX dated 13.12.1994 was continued and effective. The said circular is reproduced below:- In the above circular it was clarified that mixing of duty paid methanol with motor spirit whether it amounts to manufacture or otherwise within the meaning of section 2(f). The Chief Chemist, CRCL, New Delhi s opinion to be followed. The said opinion is extracted below:- In the instant case it is stated that methanol is blended product conforms to the BIS specifications prescribed for motor spirit. This process involves only simple blending and no new product having different properties, characteristics, or use emerges; thus mixing 3% methanol in motor spirit, which does not cease to be motor spirit after mixing 3% methanol, in my opinion, will not amount to manufacture as envisaged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of carbon deposits and accordingly are sold at a premium. The point of dispute in this group of appeals is as to whether the process of blending ordinary MS/HSD with very small quantity of MFAs (0.04% to 0.06%), to make branded MS/HSD amounts to manufacture. After considering the rival contentions on this point, we, for the reasons to given below, hold that this process does not amount to manufacture and hence would not attract any central excise duty. 4.1 The MS and HSD after being blended with small quantity of MFAs remain MS and HSD only, conforming to ISI specifications IS : 2796- 2000 and IS : 2000 respectively. Just because blending improves their quality and after blending they are sold under different brand names like Speed , Power , Turbojet etc. they do not become products different from unblended MS/HSD, with different characteristics and usages. Their characteristics remain the same, as they both have to conform to the ISI specification for unblended MS/HSD and their usage also remain the same. Hon ble Supreme Court in its judgment in case of CCE v. Sudarshan Chemical Industries (supra) and this Tribunal in its judgments in cases of Lakme Lever Ltd. v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se blending improves their quality and after blending they are sold under different brand names like Speed , Power , Turbojet etc. they do not become products different from unblended MS/HSD, with different characteristics and usages. Their characteristics remain the same, as they both have to conform to the ISI specification for unblended MS/HSD and their usage also remain the same. Hon ble Supreme Court in its judgment in case of CCE v. Sudarshan Chemical Industries (supra) and this Tribunal in its judgments in cases of Lakme Lever Ltd. v. CCE (supra) and CCE v. Mysore Ammonia Pvt. Ltd. (supra) has held that a process or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture. In this case, the blending only improves the quality of the MS/HSD resulting in better value addition, without charging the basic characteristics and usages of the products. 5.2 Besides applying the principles laid down on the subject by the Hon ble Supreme Court in a series of judgments in the cases of - (i) South Bihar Sugar Mill v. UOI reported in 1978 (2) E.L.T. J336 (S.C.); (ii) UOI v. Delhi Cloth Mills Ltd. reported in 1977 (1) E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inate Bench in the HPCL case (supra) is binding on us or otherwise when the SLP against the said order has been admitted by the Hon ble Supreme Court and the same is pending. We find that the Co-ordinate Bench has on almost on similar facts considered all aspects of the concept of manufacture as laid down by the Hon ble Apex Court in a series of cases as referred to in the said Order and arrived at a categorical finding that blending of MS with MFA does not result into the manufacture of a new product, even if the emerged product is branded as speed and marketed accordingly after some value addition. The said judgment was later followed by another Bench of the Tribunal in the case of Bharat Petroleum Corporation Ltd. v. CCE, Lucknow reported in 2009 (240) E.L.T. 403. We are in agreement with the said judgments. Also, it has been brought to our notice that on similar facts, show cause notice issued by other Commissionerate has been dropped holding that mixing of MS with MFA does not result into a new product and accordingly no manufacture takes place within the meaning of Section 2(f) of the CEA, 1944. In view of above, we do not find force in the arguments advanced by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue addition, without charging the basic characteristics and usages of the products. 4.2 The ratio of the Hon ble Supreme Court s judgment in case of J.G, Glass v. UOI (supra) in which it was held that printing of glass bottles does not amount to manufacture is squarely applicable to the facts of this case. 4.3 Hon ble Supreme Court in a series of judgment - South Bihar Sugar Mill v. UOI reported in 1978 (2) E.L.T. J336 (S.C.) and Union of India v. Delhi Cloth Mills Ltd. reported in 1977 (1) E.L.T. J199 (S.C.) and Tega India Ltd. v. CCE reported in 2004 (164) E.L.T. 390 (S.C.) has held that manufacture implies a process, as a result of which a new product with distinctive name, character and usages emerges, that the word manufacture implies change, but every change in raw material is not manufacture and that there must be such a transformation in the raw as a result of the processing that a new and different article with distinct name, characteristics and usages emerges. This criteria of manufacture is not satisfied in this case as, as mentioned above, the MS and the HSD after blending with MFA remain MS and HSD only and except for a brand name being added to their name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t characteristics and usages. Their characteristics remain the same, as they both have to conform to the ISI specification for unblended MS/HSD and their usage also remain the same. Hon ble Supreme Court in its judgment in case of CCE v. Sudarshan Chemical Industries (supra) and this Tribunal in its judgments in cases of Lakme Lever Ltd. v. CCE (supra) and CCE v. Mysore Ammonia Pvt. Ltd. (supra) has held that a process or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture. In this case, the blending only improves the quality of the MS/HSD resulting in better value addition, without charging the basic characteristics and usages of the products. 4.2 The ratio of the Hon ble Supreme Court s judgment in case of J.G. Glasss v. UOI (supra) in which it was held that printing of glass bottles does not amount to manufacture is squarely applicable to the facts of this case. 4.3 Hon ble Supreme Court in a series of judgment - South Bihar Sugar Mills v. UOI reported in 1978 (2) E.L.T. J336 (S.C.) and Union of India v. Delhi Cloth Mills Ltd. reported in 1977 (1) E.L.T. J199 (S.C.) and Tega India Ltd. v. CCE reported in 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture. 6 . As the issue has already been settled in the appellant s own case for the earlier period of the case. In that circumstances, the impugned order is not sustainable and the same is set aside. The appeal is allowed with consequential relief, if any. In the case of BHARAT PETROLEUM CORPORATION LTD. v. CCE, 2019 (366) ELT 903 (Tri.-Kol.) 2 . Heard the Ld. Advocate appeared on behalf of the appellant. It has been brought under notice by the Ld. Advocate on behalf of the appellant that the issue is covered by the Tribunal s order in the case of Bharat Petroleum Corpn. Ltd. v. Commr. of C. Ex. S. Tax, Patna [2013 (295) E.L.T. 106 (Tri.-Kolkata)] and also in the case of Hindustan Petroleum Corpn. Ltd. v. Commissioner [2009 (234) E.L.T. 648 (Tribunal)]. Following the ratio laid down in the above cases which squarely cover the present case, we allow the appeal. 4.3 In view of the consistent view taken by this tribunal in the aforesaid judgments, blending of additives with the motor spirit does not amount to manufacture. In the present case not only it is supported by the aforesaid judgments but there is a clear board circular according to which the blendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellants manufacture mild steel pipes and tubes. About 30% of the production is cleared at that stage, and the product is then known as black pipe. The balance production is taken to separate shed in the appellants factory premises and galvanised. The dispute is in relation to the galvanised black pipe. According to the appellants, what they clear is black pipe, the process of galvanisation is not a process of manufacture and no addition can be made to the assessable value of the black pipe on account of the galvanisation that subsequently occurred. The Tribunal rejected the contention. It said that the appellants themselves had, in their classification list, declared M.S. black pipes and galvanised pipes as their products. In such a situation, the mere fact that galvanisation was done subsequent to paying duty on the M.S. black pipes could not, by itself, be a ground for not including the cost of galvanisation in the assessable value of the black pipes subjected to the process of galvanisation. While that process did not amount to manufacture, it added to the intrinsic value of the product to make up the full commercial value which was realised by the appellants by cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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